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Bad taxes

It is budget day tomorrow. There is small chance of finance minister Michael Noonan introducing a progressive taxation system; one that bears upon people according to their ability to pay, one that is efficient in its collection so as to maximize the revenues available to the state, rather than one where much of what is collected goes to running the collection system. Regardless of what happens, the soft targets will be singled out by the revenue officials, those who do not have accountants and solicitors to massage the figures. The chances of ordinary people escaping the continuing burden of taxation are slim.

In the late 1970s, a comical story did the rounds in London. The Royal Shakespeare Company, based then at the Aldwych Theatre, had a very successful run with Wild Oats by John O’Keeffe. The play attracted excellent reviews from the press, but caught attention in other quarters. The Inland Revenue could find no record of Mr O’Keefe having paid any income tax and began to make inquiries about his whereabouts and tax status. O’Keeffe, known for his comedies, would have been delighted at such a comic development; he died in 1833 almost a century and a half before the taxmen began asking their questions.

Posthumous pursuit of people is not so strange. On a road near Ardglass in Co Down, there was a single storey cottage. Unused for some time, it had become a store for a local farmer. Even the door was made of corrugated iron. Tom, a friend was passing one day when he spotted two men in suits standing outside the cottage. He stopped and asked them their business.

“We are from the TV licence office”, they said. “Does Mr Carson live here?”

“He lived here last time I saw him”, said Tom.

“Buck eejits”, he told me, “the man has been dead for years. But I told them no lie. He was alive and well and living there the last time I saw him”.

As the budget approaches, John O’Keeffe’s unpaid taxes and Mr Carson’s missing television licence come to mind.

Adam Smith, a father figure of economics, set down in his “Wealth of Nations”, what he described as ‘canons of taxation, principles of any effective taxation system. The canon of economy states,

‘Every tax is to be so contrived as both to take out and keep out of the pockets of the people as little as possible over and above what it brings into the public treasury of the state’.

In other words, the cost of implementing a tax should be a small element of what it yields, yet Noonan’s property taxes and water charges have been hugely expensive enterprises, Irish Water particularly managing to generate huge bureaucratic costs. Despite their dismal performance in last week’s by-elections, the Government will continue to refuse to admit they have got anything wrong and those charged with raising revenue will be pursuing the O’Keeffe’s and Carsons of the 21st Century. Even Adam Smith, a man admired by conservative politicians, is more progressive than the Irish government.